Europe full of copper due to stalled Asian demand
By Lida Poletz
LONDON, Sept 12 (Reuter) - Slack Asian demand for physical copper has left Europe awash with
the red metal, including rarely seen South American brands, traders said on Friday.
``It's all the fault of the Chinese. They've really slowed down a lot, along with Taiwan, Thailand and
the others. So all this metal is piling up,'' a London-based physical trader said.
Metal originally intended for Asia is being diverted to Europe, traders said. Chilean metal, including
rarely seen types such as Mantos Blancos, has made an appearance.
Chinese refined copper imports have decreased sharply so far this year, traders noted. Some
Chinese officials have forecast total imports at 100,000 tonnes this year compared to around
157,000 last year.
Elsewhere in South East Asia, economic crises have hurt economies and stalled copper imports,
while in the U.S. demand also appeared on the decline.
``The surplus has been building since June. May through July is when the Chinese stopped buying it,
and with the very high backwardation in July, stocks were bound to go up,'' a trader said.
London Metal Exchange stocks alone have doubled since June to 288,775 tonnes.
Another factor is better availability of standard grade copper, due in part to Russian suppliers easing
once-stringent pre-financing requirements.
``There's plenty of standard copper coming from the CIS this year that is being consumed by brass
mills, which subsequently don't need as much Grade A,'' a trader said.
The discount for standard grade copper was roughly between $30-$40 cif Rotterdam, compared to
around $100 a year ago.
In grade A copper, premiums have eased in recent weeks to $15/$25 in the U.K. and $15/$20 cif
Rotterdam.
But some traders said premiums were in effect nominal.
``If you paid $30 for something you're not going to give it away for nothing. And with the contango
we can afford to hold onto the material,'' one said.
--Lida Poletz, London newsroom +44 171 542 2936 |
